Methods to Achieve Relief from IRS Tax Debt

Last updated on August 21, 2023

When the IRS makes you aware of a tax debt and you don’t respond, they will eventually pursue collection efforts. In order to be compliant, you’ll need to resolve the tax debt, which does not necessarily mean paying back the entire amount at once. If your financial situation doesn’t allow for one, full payment, you can still resolve the tax debt with an IRS payment plan.

Installment Plans

One of the most popular tax debt resolutions involves making payments in monthly installments. IRS payment plans have certain qualifications that must be met. There are a variety of plans to choose from, each with specific requirements, including the amount of the debt and the taxpayer’s financial ability.

Installment agreements allow you to pay your entire tax debt in fixed monthly payments. The amount of each of these monthly payments is agreed upon by the IRS and the taxpayer applicant. Many individuals find this arrangement to be a comfortable way to resolve their tax debt over time.

Tax Debt Reduction

Taxpayers with limited financial means may be eligible for tax debt reduction plans such as an Offer in Compromise or a Partial Payment Installment Agreement. Through these payment plans, taxpayers can actually get a reduction in their tax debt. The amount that’s reduced will depend on not only the total owed, but the taxpayer’s financial condition.

Only taxpayers who are facing financial hardship should apply for tax debt reduction plans, as the IRS may penalize those who can apply but have the means to pay.

Innocent Spouse Relief Program

In the event that you have a tax debt from a return filed jointly with a spouse, but you had no knowledge about the understatement at the time of signing the return, then you may request innocent spouse relief. If approved, the IRS will charge the responsibility of paying the tax debt to the liable spouse. It’s best to seek help from a tax resolution company when pursuing innocent spouse relief.